Board of Regents approves UMR's plan to convert DoubleTree into student housing

The University of Minnesota Board of Regents voted unanimously on Thursday to approve a proposal for additional student housing in downtown Rochester.

The plan calls for leasing the DoubleTree Hotel and converting the building into a student housing complex, complete with 400 beds, a recreational center, and dining hall. University of Minnesota Rochester will lease the building for 12 years from Titan Development beginning in fall 2023, with the option to extend the lease to as late as 2041. 

Members of the U of M administration said the deal came together quickly, but was necessary given UMR’s projected enrollment growth. Titan had given the U of M a short timeline to complete renovations on the $7.6 million build-out by next fall.

“As you can imagine, it takes a great deal of lead time for an operating hotel to stop taking reservations, plan for a shutdown of operations, and conduct planning to begin construction activity and meet a strict opening deadline for us,” said Myron Frans, the university system’s senior VP for finance and operations.

UMR Chancellor Lori Carrell said the urgency for student housing reflects the university’s enrollment growth in recent years. The school, she said, is now at capacity for student housing.

Board member James Farnsworth said he also heard concerns from students about housing and dining options while on a recent campus visit. 

“We have heard you, and here is what the university is doing about it,” said Farnsworth.

As for the decision to lease over build, U of M officials said that was due to the high costs of downtown real estate, as well as market conditions.

“Recognizing that we have had a 20 percent increase in inflation rates for construction projects over the last year, this is really a strategic decision to look at using the leasing opportunities to mitigate that long-term risk as it relates to the cost of construction and what it would cost if we were constructing our own facility at this time,” said Leslie Krueger, the system’s assistant VP for planning, space, and real estate.

Original story from June 8, 2022

As its enrollment continues to grow, the University of Minnesota Rochester is looking to increase its supply of student housing.

Working with Titan Development, the health sciences university is proposing a plan to convert the DoubleTree Hotel by Hilton, 150 South Broadway, into an extension of its downtown campus.

The proposal, which is set to go before the U of M Board of Regents on Thursday, would include renovating and refurnishing nearly 200 hotel rooms to support housing for at least 400 students.

UMR says the building would also be used to address other student needs, notably a recreational space. The university has been without a fitness facility since the Rochester YMCA shuttered earlier this year. Other amenities to be offered in the building, according to a report provided to the board, would include a pool, study area, and student dining hall.

If approved by the board, the lease would begin in August 2023 and run through 2035, with the university having the option to potentially extend the lease until 2041. The estimated cost for the lease would be about $3 million a year, plus another $1 million for real estate taxes and utilities. Rent would then increase 1.75% annually. The university intends to pay for the lease cost with student room and board and recreational fees.

Titan Development, the proposal says, would be responsible for making an initial investment of about $7.6 million to convert the 33-year-old building from a hotel to a student housing complex.

It was not immediately clear if or how a potential lease agreement with the university would impact current tenants in the building, including Pescara restaurant, which leases part of the first floor. Titan CEO Andy Chafoulias was unavailable for comment. A UMR spokesperson said the university and Titan plan to provide additional information on Friday.

UMR, which welcomed its first class of 57 students in 2009, has steadily been expanding its footprint downtown in recent years. In addition to the top two floors of the Galleria, also owned by Titan, UMR has long-term leases at 318 Commons and One Discovery Square, as well as shorter-term lease for student apartments at Residence at Discovery Square. It has also spent millions of dollars buying up land on the south end of downtown.

As it closes in on an enrollment milestone of 1,000 students, the university says taking on the DoubleTree building would allow it to continue on its growth trajectory by increasing its ability to recruit first-year students.

Additionally, if the proposal is adopted, UMR plans to implement a second year on-campus requirement for students. The university points to evidence that shows “on-campus housing in structured living-learning communities supports student retention and improves student academic outcomes including timely degree completion.”

Sean Baker is a Rochester journalist and the founder of Med City Beat.